Why SaaS Reporting Is Essential (And the Metrics You Need)
So you’re in a position of leadership in a SaaS business, early in its development, and you feel like it’s hard to get the answers to any of your burning questions. What gives? If you’ve worked at larger organizations before, you’re probably used to databases full of useful information, and you’re wondering where to find that at your current job. The reason for this might just be that your organization’s SaaS reporting isn’t ironed out yet.
Find out what SaaS reporting is, the metrics you need to build a strong report, and the tools you can use to get it all done.
What is SaaS reporting?
SaaS (software-as-a-service) reporting is how companies in this space make sure that they’re still growing — no matter what happens in the broader market. With the right reporting workflow in place, SaaS leaders can know how effective their strategies are, where their organization’s weaknesses are, and what they need to do to keep growing.
Much of this reporting is similar to what you’d find in any other organization; reports outlining profitability, expenses, and more. But SaaS reporting also tracks metrics that, while not unique to the SaaS world, are definitely hallmarks of it.
The most important SaaS reporting metrics
While every organization is different, you’ll find six metrics in most SaaS businesses:
- ARPU: Standing for “Average Revenue Per User,” this metric tells SaaS leaders how valuable an individual customer is, on average. This metric informs marketing and sales initiatives, product priorities, and more.
- Conversion rate: This metric tracks how many visitors — to a website or other marketing channel — turn into customers. Since SaaS tools often expect new users to self-serve, meaning they need to figure out how things work on their own, this metric is crucial to many initiatives.
- Churn rate: This simple calculation tells SaaS leaders how many users they can expect to lose at the end of a given month. When compared with incoming deals, churn tells them whether the business is growing or dwindling.
- MRR and ARR: Short for Monthly Recurring Revenue and Annual Recurring Revenue, respectively, these metrics quantify the revenue a SaaS business makes. Since these businesses make money through subscriptions, that recurring revenue is important to track.
- CAC: This metric stands for Customer Acquisition Cost, and communicates how expensive an average customer is to acquire. You can use a general CAC to track this across all marketing and sales channels, or have a CAC for each channel.
- LTV: Lifetime Value quantifies how valuable an average customer is over the entire time they pay for your product or service.
Depending on the kind of reporting you need to do, it might happen on a monthly, weekly, or quarterly basis.
4 example questions that SaaS reporting can answer
At its core, SaaS reporting is about answering burning-hot questions from teams, individual stakeholders, and even customers. That’s why your reporting workflows should always be about answering those questions in the best possible way, rather than just checking off boxes.
Here are some of the questions SaaS reporting aims to answer.
- Is the business growing? Remember this old adage: “If you’re not growing, you’re dying.” With the right report, you can confirm whether your SaaS business is growing tall…or not so much.
- Is this marketing initiative working? While gauging traffic — how many potential customers check your website or other content — is a great vanity metric, it’s not the best way to tell how successful your marketing is. With SaaS reporting focusing on conversion rates, you can answer any marketer who asks this.
- Is this sales tactic worth it? With CAC and LTV, you can get a rough estimate of the return on investment you’ll get from a particular sales tactic. By reporting on LTV regularly and estimating the CAC of a specific tactic, you can determine whether it’s worth pursuing.
- Which feature should we build next? Between ARPU, LTV, and other metrics, SaaS reporting can give you an idea of what your ideal customer looks like. This can help guide your product team as they decide what they should be working on.
Examples of tools you can use for SaaS reporting
While SaaS reporting focuses on metrics you might not see in reports in other organizations, you’ll see similar tools as you would anywhere else. Here are a few examples of tool categories that are crucial for SaaS reporting.
Customer relationship management (CRM) tools
These tools track crucial customer information from contact information to their conversations with your teams and even what subscription plan they’re using. That makes it a great jumping off point for building reports and tracking other data. Examples of these tools include:
There’s nothing like a good old spreadsheet. They’ve been around forever because they’re so reliable, and it doesn’t take that much training to learn how to use them. A spreadsheet is a great tool for SaaS reporting, and often is the first kind of tool a startup will use. Examples of spreadsheet tools include:
- Google Sheets
- Zoho Sheets
Dedicated data tools
While spreadsheet tools and CRM platforms are great places to store data, you need some kind of glue to bring it all together. There’s a host of tools out there that do this, and they’ll be a great resource when building your reports. Examples of these tools include:
- Google Data Studio
SaaS reporting is an essential part of any business that wants to grow — which is all of them. The metrics are pretty straightforward, the tools are widely available, and all you need is a bit of elbow grease to make it all work.